INSUBCONTINENT EXCLUSIVE:
MUMBAI: The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has held that, if an authorized sale deed did not specify the extent of
holding of a couple in a house residential or commercial property, then both would be held as owning an equal share in it
Judgment in the case of Shivani Madan (the taxpayer), the ITAT subsequently supported a taxation of Rs 9.8 lakh in her hands during the
fiscal year 2014-15 (the year pertaining to the lawsuits)
As this property was vacant, 50% of the notional lease calculated under the provisions of the Income Tax (I-T) Act was held taxable in the
wifes hands.An earlier search carried out on a company group and as a result on the taxpayer had revealed purchase of a house residential or
commercial property in 2011 for Rs 3.5 crore in joint ownership with her husband
This resulted in queries on why the earnings from such home was not divulged in her I-T returns.Madan had actually invested just Rs 20 lakh,
which is around 5.4% of the purchase price of the property
In action to the I-T notification, she revealed home residential or commercial property earnings in percentage to her share
In the numerous stages of appeal, this approach was declined
When the litigation reached the ITAT, she submitted that it is customary to include the other halfs name in the sale deed, therefore taxing
50% of the house home income in her hands was not justified
Numerous judicial choices were also referred to for strengthening this argument.However, based on the realities of the case, the ITAT turned
The tax tribunal bench noted that the Calcutta high court had actually held income from property must be taxed just in the name of the
partner, as the better half was a homemaker, with no independent source of earnings and the whole investment was made by the spouse
Whereas in the case of Madan, she was an income earner (by the way employed with business group on which the search was performed)
Tax specialists mention that it is rather common for the name of the partner to be added to a house home
Nevertheless, paperwork of the specific share contributed by each co-owner to the builder/seller of the property, details of bank accounts
from which payments have been made, past income tax return et al would come in helpful in case of tax lawsuits.
